Correlation Between Tidal Trust and T Rex
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and T Rex at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tidal Trust and T Rex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tidal Trust II and T Rex 2X Long, you can compare the effects of market volatilities on Tidal Trust and T Rex and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tidal Trust with a short position of T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and T Rex.
Diversification Opportunities for Tidal Trust and T Rex
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tidal and NVDX is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and T Rex 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X and Tidal Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tidal Trust II are associated (or correlated) with T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of Tidal Trust i.e., Tidal Trust and T Rex go up and down completely randomly.
Pair Corralation between Tidal Trust and T Rex
Given the investment horizon of 90 days Tidal Trust II is expected to generate 0.4 times more return on investment than T Rex. However, Tidal Trust II is 2.52 times less risky than T Rex. It trades about 0.18 of its potential returns per unit of risk. T Rex 2X Long is currently generating about -0.08 per unit of risk. If you would invest 2,002 in Tidal Trust II on August 30, 2024 and sell it today you would earn a total of 153.00 from holding Tidal Trust II or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. T Rex 2X Long
Performance |
| Timeline |
| Tidal Trust II |
| T Rex 2X |
Tidal Trust and T Rex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and T Rex
The main advantage of trading using opposite Tidal Trust and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, T Rex can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in T Rex will offset losses from the drop in T Rex's long position.The idea behind Tidal Trust II and T Rex 2X Long pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| T Rex vs. Freedom Day Dividend | T Rex vs. Franklin Templeton ETF | T Rex vs. iShares MSCI China | T Rex vs. Tidal Trust II |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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